Can an AI perform market manipulation at its own discretion? – A genetic algorithm learns in an artificial market simulation –

Abstract

Who should be held responsible when artificial intelligence (AI) performs market manipulation? In this study, I constructed an AI trader using a genetic algorithm that learns in an artificial market simulation. Then I investigated whether the AI trader discovers market manipulation through learning even though the AI developer had no intention of manipulating the market. Results showed that the AI trader discovered market manipulation as an optimal investment strategy. This suggests that regulation is necessary, such as requiring developers to prevent AIs from performing market manipulation. The results also suggest that developers should limit AI traders to avoid impacting market prices.